Rising property prices are continuing to defy the doom-mongers, and rents haven’t moved for the past two years — so it is no surprise plenty of landlords are selling up. Yolande Barnes, head of residential research at Savills, says that a significant amount of landlords are indeed putting up For Sale boards. But, she says, don’t confuse this with the white flag.

“I would be very surprised if people weren’t selling,” she says. “If you think that they started buying in the late 1990s, there will be some who will consider it time to realise those gains.”

Is this because they believe house prices have reached their peak? Maybe, concedes Barnes. Yet the buy-to-let market is not shrinking; Barnes estimates it continues to account for about 12% of the total residential market.

“You shouldn’t see every sale as an exit out of the sector. Landlords may well be selling, but may also be buying other properties with those gains.”

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• The ties that bind

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• Tales of a landlady: Avoiding the agents

• Tales of a landlady: In the dock

• Tales of a landlady: the age of reason

• Tales of a landlady: Heroes and villains

• Tales of a landlady: High maintenance

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• Spread betting

• When buy-to-let turns from a hobby into a living

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• Landlords: halo or horns?

• Bidding wars

• Time to quit the ring?

Or, they might be selling on to bigger institutions.

“European funds are very interested in British residential property portfolios,” Barnes says. “But the big institutions won’t countenance anything under a certain size. A portfolio worth less than several million doesn’t interest them.

“So the name of the game now is to bring together big portfolios that will interest them. And there is an emerging sector of companies doing just that, putting together big portfolios of residential property that will then be sold on to the insurance companies, the usual investing institutions.”

You don’t even need an empty flat to get into the investment portfolio game. “Oh, yes, there is an emerging market for portfolios of already-let properties,” says Barnes.

Lenders haven’t witnessed any slack either. “We’ve seen some guys doing some profit-taking if they reach a high level,” says David Whittaker, managing director of Mortgages for Business, using delightful City-speak to confirm that, yes, landlords are selling. “But there is no wholesale sell-off.” He thinks it’s more about a trend for flogging the chic apartment only to replace it with a derelict building.

“Most people start out in buy-to-let with properties that are ready to let, with no issues. Then, in time, they sell these properties and go on to buy places they can refurbish and then let.”

Making far more capital gain that way, you see, because your building is now worth more than it was as a ruined dump.

“This type of landlord is in there for the long term, and is very active,” says Whittaker. “And most of our work now comes from established landlords. In 2006, nearly three-quarters (73%) of our activity on buy-to-let was for existing landlords.”

“A lot of landlords are cashing in because they think the market has reached its height,” agrees Ian Gardiner, lettings manager at John Wilcox, an estate agency in Holland Park, west London.

“One of my clients has just sold three of his rental properties in Holland Park, one for £1.8m, one for just under a million, and one for £1.2m. He wants to buy something else, but he’s now looking for wrecks he can refurbish. He will bank the money until he finds something.”

Landlords don’t want to wring the neck of the goose that has brought them so many golden eggs. The only trouble is that there aren’t that many new geese around at the moment.

“We have lots of landlords who have sold up, perhaps picking off properties in their portfolio that don’t typically get a good return,” says Gardiner. “Now they want to buy some more stock, but there is nothing around.”

Once you have your cash, it’s probably best to stick with the tried and tested norm, if you are going to get back into the buy-to-let market.

“We are advising clients to sell and reinvest,” says Tim Hyatt, head of lettings at Knight Frank estate agency, who says about 20% of his landlords are considering selling up, slightly above the norm. “One- and two-bed flats are always good. Always. If you have a good-quality flat, preferably in a new block, close to amenities and neutral in style, it will let — day in, day out. It’s a dead cert. In London, at least.”

Hyatt thinks that landlords should regard whatever they buy as “a totally flexible investment that you can buy and sell, rather like any working commodity”.

Vinoo Kumar is a landlord who, until a few weeks ago, had three studio flats in South Kensington, with a total value of £900,000. Having bought them two years ago for about £800,000, he has just sold them on.

“A lot of Russian and Indian money is moving into Knightsbridge and Kensington, and prices are going up and up and up. So I decided to sell them all. But I am reinvesting in Kensington and Chelsea. There are pockets where I can still get £500 per sq ft, and I expect that to go up to £2,000 per sq ft next year. I’m progressing on four deals right now. There is a lot of cash around here, and I think prices will keep rising in this postcode,” he says.

I’d say this looks not like a series of fire sales, more a mature market on the move. You read it here first.

buytolet@sunday-times.co.uk

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